According to the Governor of the Reserve Bank of South Africa (RBSA), the implementation of an African currency is a political endeavor with a low likelihood of success due to the challenges associated with achieving ‘macroeconomic convergence.’
Kganyago shared his views during an extensive interview with South Africa’s Metro FM radio. According to the Governor, achieving an African currency would necessitate comparable levels of inflation, debt, consistent fiscal policies, and banking regulations across nations on the continent.
He stated:
“Without these elements, it would be impossible. What do you need to have an African currency? You need to have macroeconomic convergence.”
Kganyago further mentioned that the leaders of the BRICS group, which includes Brazil, Russia, India, China, and South Africa, would need a fiscal union similar to the European Union if they intend to establish a common currency.
“If the BRICS political leaders say that is where they are going… you’ll have to get a fiscal union, you’ve got to get macro-economic convergence,” Kganyago said.
“And importantly, you need a disciplining mechanism for countries that fall out of line with it. And the Euro project demonstrated just that.”
In May 2023, Kganyago stated that achieving a currency issued by a group of countries located in different geographical regions is challenging since currencies are inherently national in nature.
Naledi Pandor, South Africa’s foreign minister who oversaw the preparations for the summit of the bloc’s leaders in August 2029, expressed that the feasibility of introducing a common currency would be a topic of discussion during the meeting.
Foreign ministers of Brazil, Russia, India, China, and South Africa convened in Cape Town in June 2023 to make arrangements for the summit scheduled to take place in Johannesburg from August 22 to 24. One of the significant topics of discussion during the meeting was the utilization of alternative currencies.
At the end of the BRICS 2023 summit, emphasis was again put on utilizing national currencies for trade among BRICS nations.
Senior officials within BRICS have raised the possibility of introducing a common currency as a response to the repercussions stemming from increased interest rates in the United States. Additionally, the use of the U.S dollar as a tool for imposing sanctions by Washington has also prompted discussions on the topic.
Ahead of the summit, several countries, including the United Arab Emirates, Saudi Arabia, Iran, Egypt, Algeria, Indonesia, Bahrain, Nigeria, Mexico, and Argentina, had submitted applications to join BRICS.
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